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Default "doesn't mean that we can't make payments on Treasury bills or other obligations," Representative Charles Bass, a New Hampshire Republican, said CNN's "State of the Union" program yesterday.
"There is a difference between strategic or technical default and default where you really don't have the economy to support the spending," Bass said. "We are not at that point yet. We could be. We could be, like some European nations."
"I think the global economy will understand that the United States has the ability to meet its obligations," Bass said. "But it's not going to be able to do it over the long term if we can't control the growth of government."
Do you see how cleverly Bass finessed that?
• Default = Bad. But: US = Mighty, so US Default = Not So Bad.
• But: Without "Controlling Growth of Gov't" = US Becomes Wimpy Socialist European Nation. So Default = Very, Very Bad.
• Therefore: Medicare turned into Vouchercare = Win for US!
Of course, Bass could be talking about cutting defense, or raising the cap on Social Security, or doing something about controlling medical costs, but there's been little or no discussion of that. There's been a lot of discussion about Bass and his companion Frank Guinta voting for the Ryan plan to break America's promise to those 54 and younger. So let's not pretend for whom he is carrying water.
Back in Reality, a Reuter's "Factbox" says that "Missed payments will shatter investor faith in Treasuries and trigger a global selloff in U.S. government debt." And in regard to Bass' nonsense about "technical" versus "strategic" default, President Bush's CBO director flatly says:
"It's a bad idea," Holtz-Eakin said at a panel discussion of former CBO heads in Washington. "Little defaults, big defaults; default's a bad idea period and there should be no one who believes otherwise."
...He added that the market would not be easily reassured even after a brief default, likening it to wrecking one's house and then asking for a second mortgage on the property.